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The pandemic seems to have overwhelmed the USA and all we can do, it seems, is watch in horror as the virus spreads and Trump sulks. Truly an awful and sch a dreadfully sad situation. Biden is still being obstructed in the transition and had to see how this will all end.
In the UK the virus lock-down seems to have started to work – in patches – and we can only hope that the success spreads. Otherwise there seems to be some chance of a reasonable outcome to Brexit. Only a few weeks to go!
In OZ we have a quarantining PM and pressures on the Government from the Brereton Report and China. Fortunately the virus seems to be under control here – for now!
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Major Issues.
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Australia should heed the lessons of the US elections
Australians are unlikely to support as crude a figure as Donald Trump. But we still must guard against the hyper-partisanship and identity politics that have bitterly split America.
Alexander Downer Columnist
Nov 15, 2020 – 12.38pm
Are there any lessons for Australia coming from the recent US elections? Plenty of commentators think there might be, and they are probably right.
The Australian media has followed the US elections in granular detail. And why not? The US is central to the stability of the Indo-Pacific region; it is the largest foreign investor in Australia and the primary destination of Australian offshore investments. It’s also our second biggest trading partner. What happens there affects all 26 million of us.
There are three lessons for us coming out of the US elections.
First, there is the corrosion of underlying social cohesion. As Robert Putnam has argued in his latest book, The Upswing, America is going through an unusually difficult period.
There has been a growing partisanship which has reached almost hysterical levels and is now at its worst since the Civil War in the 1860s. That may be a function of the polarisation of the media, both social and traditional. Partisanship has been growing in the US since its low point in the late 1960s.
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https://www.afr.com/wealth/personal-finance/why-it-s-better-to-stay-invested-20201115-p56eqg
Why it's better to stay invested
A panic move to cash after the start of the pandemic would have left you out on the sidelines, while a diversified portfolio smoothed the highs and lows and outperformed equities.
Scott Haslem Contributor
Nov 16, 2020 – 12.00am
Everyone, at some point in their life, finds themselves with their investment portfolio or superannuation savings sitting largely in cash rather than invested in the market. This is usually because they are moving between superannuation funds, changing wealth managers or just starting the investment journey in the wake of selling a business.
Being in cash brings its own challenges. While it can be stressful to experience the shorter-term ebbs and flows of markets when fully invested, it’s also stressful to watch markets rise (and fall) while you are considering how to re-engage your portfolio or invest for the first time. Thankfully, while it can be challenging, there are sensible ways to implement portfolios in a timely and diversified manner to minimise re-investment risk.
However, there are also times investors find themselves in cash because they have made an active choice to exit the market. This may reflect an emotional decision brought on by volatility, concern about whether the risk embedded in their portfolio is appropriate, or an inability to garner visibility of the future. Of course, building portfolios is not about knowing the future but building in defences that can deliver the targeted return over time through an ever-changing cycle.
As 2020 draws to a close, it’s hard to find a year that better highlights the rewards of leaning on the discipline of a diversified portfolio, and not panicking into cash when uncertainties arrive. The past year has delivered a one-in-100-year pandemic, a global recession, a tumultuous US election that unseated a first-term president, and accelerating climate events.
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Allies sold cipher machines that let them spy on friend and foe
· The Times
Months after the end of the Second World War, an American master code-cracker travelled to the Swiss lakeside town of Steinhausen to visit a Swedish cipher-smith whose devices had rivalled the Nazis’ Enigma machines.
William Friedman and Boris Hagelin got along famously. “I had (an) almost tearful farewell with the Hagelins,” Friedman wrote in his diary. “They are such charming people.”
This friendship went on to become the foundation of a global espionage ring that altered the course of the 20th century, the full story of which is only now emerging. Codenamed Operation Rubicon, it rendered half of the world’s most secret communications transparent to the US, West Germany and a handful of their closest allies.
It has been described as the intelligence coup of the century. It allowed a Dutch cryptology technician to give Britain the key to unlocking Argentina’s codes, possibly leading to the sinking of the warship General Belgrano, in its defence of the Falklands. It turned West Germany into an intelligence superpower, influenced the 1979 Iran hostage crisis and enabled the US to broker peace between Egypt and Israel in the 1978 Camp David accords.
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https://www.afr.com/wealth/investing/how-to-supercharge-your-portfolio-20201116-p56ev0
How to supercharge your portfolio
Investors need more than just traditional bonds and equities as rates hover around zero. They should focus on dynamics, innovation and returns.
James Wright Contributor
Nov 17, 2020 – 9.35am
It is time to rethink your portfolio status quo. Cash rates are next to zero and won't rise for years. The capital in other defensive asset classes is also failing to keep pace with inflation and offer any correlation benefits against volatility.
With bond yields anchored near zero and bound by central banks, and while trend economic growth is moderating due to population dynamics and productivity issues, portfolios will need to pivot away from traditional bonds and equities.
Income is still likely to be generated from large, stable, listed equities and higher weights to investment grade credit portfolios.
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https://www.afr.com/chanticleer/monday-s-market-outage-a-global-embarrassment-20201116-p56f2k
Monday's market outage a global embarrassment
The closure of share trading on the ASX during the strongest bull market ever seen in the month of November reflects a failure to learn from the major outage in 2016.
Nov 17, 2020 – 12.00am
The ASX compounded its failure to keep the country's primary equity capital market open by failing to ensure a seamless transition to the alternative market, Chi-X.
What makes this failure by the ASX even worse is that the market operator appears to have snubbed its nose at the recommendations made by the Australian Securities and Investments Commission following the last major outage in 2016.
Also, its actions went against what it said it would do in response to the 2016 outage.
Surprisingly, ASIC responded to Monday's market outage with a media statement full of motherhood comments which, in effect, amount to less than a slap on the wrist for ASX.
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Why the ABC does not need redemption
The national broadcaster is frequently criticised and sometimes for good reason. But ABC board member Joseph Gersh says calls to defund Aunty are nonsense.
By JOSEPH GERSH
· 17 November, 2020
Chris Kenny has been a vigorous critic of the ABC while previously “resisting calls for its privatisation or abolition”, but after last week’s Four Corners, Media Watch and QandA he has asserted that it now “is beyond redemption”.
This follows similar calls from the Institute of Public Affairs and other respected organisations.
I cannot agree. I declare my centre-right bias; a long-time reader of The Australian, I was appointed to the ABC board by Turnbull government communications minister Mitch Fifield.
The ABC is frequently criticised and sometimes for good reason. Even the most passionate friend of the ABC could not argue that Aunty is beyond criticism.
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Asset management is in turmoil. So does value investing still work?
THE ECONOMIST
For a moment this week investors could afford to ignore stockmarket superstars like Amazon and Alibaba. As news of a vaccine broke, a motley crew of more jaded firms led Wall Street higher, with the shares of airlines, banks and oil firms soaring on hopes of a recovery. The bounce has been a long time coming. So-called value stocks, typically asset-heavy firms in stodgy industries, have had a decade from hell, lagging behind America’s stockmarket by over 90 percentage points. This has led to a crisis of confidence among some fund managers, who wonder if their framework for assessing firms works in the digital age. They are right to worry: it needs upgrading to reflect an economy in which intangibles and externalities count for more.
For almost a century the dominant ideology in finance has been value investing. It has evolved over time but typically takes a conservative view of firms, placing more weight on their assets, cashflows and record, and less on their investment plans or trajectory. The creed has its roots in the 1930s and 1940s, when Benjamin Graham argued that investors needed to move on from the pre-1914 era, during which capital markets were dominated by railway bonds and insider-dealing. Instead he proposed a scientific approach of evaluating firms’ balance-sheets and identifying mispriced securities. His disciple, Warren Buffett, popularised and updated these ideas as the economy shifted towards consumer firms and finance in the late 20th century. Today measures of value are plugged into computers which hunt for “factors” that boost returns and there are investors in Shanghai loosely inspired by a doctrine born in Depression-era New York.
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https://www.afr.com/politics/federal/sas-20201118-p56fud
Profound betrayal: 19 soldiers should face murder charges
Andrew Tillett Political correspondent
Nov 19, 2020 – 11.20am
Nineteen special forces soldiers should be referred to the Federal Police to be prosecuted for war crimes including murder for the death of 39 Afghan prisoners or civilians and the mistreatment of two prisoners, an explosive inquiry into Australia’s elite military fighting units has found.
In what he labelled as a “disgraceful and profound betrayal” of professional standards, Inspector-General of the Australian Defence Force Paul Brereton has squarely laid the blame on a clique of non-commissioned officers who demanded junior soldiers “blood” themselves by killing unarmed prisoners, planted weapons to cover up their crimes and misled their superiors.
He said none of the killings happened in the heat of battle and condemned a "warrior culture" that had been fostered within the Special Air Services Regiment.
He also said the entire Special Operations Task Group should be stripped of its unit honours because of the stain, while individual soldiers who won medals should have them reviewed.
Mr Brereton said the government should also compensate victims’ families even in the absence of a successful prosecution.
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'If you make China the enemy, China will be the enemy': Beijing's fresh threat to Australia
By Jonathan Kearsley, Eryk Bagshaw and Anthony Galloway
November 18, 2020 — 6.10pm
Beijing has issued an extraordinary attack on the Australian government, accusing it of "poisoning bilateral relations" in a deliberately leaked document that threatens to escalate tensions between the two countries.
The government document goes further than any public statements made by the Chinese Communist Party, accusing the Morrison government of attempting "to torpedo" Victoria’s Belt and Road deal, and blaming Canberra for "unfriendly or antagonistic" reports on China by independent Australian media.
"China is angry. If you make China the enemy, China will be the enemy," a Chinese government official said in a briefing with a reporter in Canberra on Tuesday.
The dossier of 14 disputes was handed over by the Chinese embassy in Canberra to Nine News, The Sydney Morning Herald and The Age in a diplomatic play that appears aimed at pressuring the Morrison government to reverse Australia’s position on key policies.
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How bank data is used to catch crooks and stamp out sex crimes
James Frost Financial services writer
Nov 20, 2020 – 9.43am
An unusual alliance between law enforcement agencies and financial services companies that share information about criminal methods and bank data has contributed to and supported dozens of arrests for money laundering, fraud and drug trafficking and other more sinister crimes over the last 12 months alone.
The small but growing group which includes regulators and banks but is headed up by AUSTRAC known as the Fintel Alliance is having an especially powerful impact on the detection of hideous crimes with its efforts contributing to a 945 per cent increase in the reporting of suspected child related offences since it was established in 2017.
AUSTRAC CEO Nicole Rose said alliance’s public-private partnership model was regarded as world leading, enabling it to distribute intelligence quickly and dismantle criminal networks around the globe.
“The Fintel Alliance has transformed our capability to tackle a broad range of threats to the Australian community, including terrorism financing, money laundering, drug trafficking, child exploitation, fraud, and other serious and organised crime,” Ms Rose said.
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Wealth inequality had stabilised before COVID-19 crisis
David Marin-Guzman Workplace correspondent
Nov 20, 2020 – 12.00am
Wealth inequality had largely stabilised and even declined slightly before the coronavirus crisis hit, while income inequality barely changed in almost two decades, new data shows.
The latest Household, Income and Labour Dynamics Australia survey revealed that while the wealthiest became much richer early last decade, increasing the gap with the poor, since 2006 until 2018 there had been little change in wealth inequality.
Average wealth grew strongly from 2014 to 2018, rising from $788,018 to $934,025, and median wealth increased from $428,973 to $503,563.
Older Australians had also seen the largest increases in wealth, particularly older couples, whose average household wealth was now over $1 million.
But because the wealth in low-wealth households also increased strongly, growing 38 per cent for the bottom 10 percentile, wealth inequality fell slightly between 2014 and 2018.
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Robodebt was a Scott Morrison fiasco at every stage
With summer just around the corner, this week’s $1.2bn settlement of the robodebt class action has shone a light on government failings.
Scott Morrison and his team have been coated in Teflon since the pandemic struck. A grateful nation has given its incumbent leaders the benefit of the doubt as we look around the world and see abject failure in handling the coronavirus elsewhere.
But such positivity shouldn’t blind us to poor conduct, and the robodebt disaster is without doubt the worst example of maladministration and callous indifference to vulnerable Australians since the Coalition took office in 2013.
The Coalition is a certainty to win the next election despite a long list of deficiencies across the policy and political spectrum. Among them: the sports rorts scandal; Angus Taylor’s still unexplained use of a forged document to attack Sydney City Council; water buybacks along the Murray-Darling Basin that simply don’t pass the pub test; a $30m taxpayer purchase of land for Sydney’s second airport at 10 times the official valuation, bought from a Liberal Party donor no less.
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Bad policy on war led to horror in the field
- 11:53AM November 20, 2020
This day of grievous shame and regret, not only for the Australian Defence Force but for the whole Australian nation, has its origin not in culture but in policy.
It has its origin in the wretchedly ill-advised way Australia goes to war.
The Howard government, for all its strengths, went to war in Afghanistan and Iraq and decided that the only people who would seek out direct combat were the special forces.
We didn’t want to risk casualties, so instead we have apparently encompassed atrocities, and risked the moral support of the Australian people for the ADF at a time when this has never been more important.
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Modern Monetary Theory is here to stay
Reserve Bank governor Philip Lowe tipped another bucket on Modern Monetary Theory this week during the Q&A after a CEDA dinner speech, reminding his audience that there’s no such thing as a free lunch and that someone always has to pay, most likely through an “inflation tax”.
He had just finished saying that inflation comes from the balance between supply and demand, and that he had been having trouble getting inflation up to the RBA’s target because globalisation and technology had changed the way the labour market operated.
“Even when unemployment is low, wages don’t rise, which results in low inflation,” he said.
So let’s call the notion of a future “inflation tax” from too much money printing OMT (old monetary theory). Supply and demand inflation, apparently, is his new experience.
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Inside the warrior culture that shamed Australia
A groundbreaking report into war crimes allegedly committed by Special Forces soldiers in Afghanistan has shocked the country and will be carried by a generation of soldiers.
Andrew Tillett Political correspondent
Nov 21, 2020 – 12.00am
When Julia Gillard visited Australian troops in Afghanistan in October 2012, she was cautiously optimistic the end was finally in sight.
The transition in handing over responsibility for security in Oruzgan province, where Australian forces were based, had already started. Morale was still good among the soldiers, despite recent casualties, including insider attacks by Afghan soldiers.
"Two-thousand-and-twelve has brought important progress in Afghanistan," Gillard told Parliament upon her return home.
But as Australians and the world have learnt this week, 2012 was the zenith of shocking atrocities allegedly committed by Special Forces soldiers, including the execution of prisoners and innocent civilians, and mistreatment of detainees.
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Asset testing expensive homes for pension could reduce overspending: Income review
By Jennifer Duke
November 20, 2020 — 5.51pm
Penalising pensioners with expensive homes could stop overspending on housing, says a wide-ranging review into the retirement system that also casts doubt on already-legislated increases to the superannuation guarantee.
Superannuation is set to rise 0.5 per cent a year above its current 9.5 per cent rate from July 2021, but the Retirement Income Review released on Friday found cancelling the increases would hand the budget billions of dollars more in tax revenue by 2030.
Treasurer Josh Frydenberg said the family home would not be means tested, but the government has yet to respond in detail to the observations about the system raised in the 638-page report.
The family home is currently exempt from the age pension assets test, and renters are allowed to have more assets than homeowners to qualify.
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Too much self-interest: why the super system is broken
Andrew Bragg
Contributor
November 22, 2020 — 12.05am
The super system has been let down by both sides of politics for too long. I know because before I entered Parliament I was at the coalface of the business sector at the Business Council of Australia.
I could see the major finance players had too much influence over Liberal Party. They argued that more super was always a good thing. Too many vested interests were putting their own interests ahead of workers and the nation. And getting the policy settings they wanted.
The Federal Government is considering canning already-legislated increases to the superannuation guarantee following an independent review into Australia's retirement income system.
Today, I see the union/super fund influence over the Labor Party which demands more super so the funds can funnel more money to a dwindling union base. Finally, we have an independent report which has my side of politics looking more critically at super for the first time in 30 years.
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Coronavirus And Impacts.
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Coronavirus: aged-care influx ‘led to huge health worker cluster’
A large, sudden influx of coronavirus-positive aged-care residents contributed to Australia’s biggest health worker cluster of 262 cases of coronavirus among Royal Melbourne Hospital staff in July and August, according to the authors of a paper published in the Medical Journal of Australia on Monday.
The authors, led by RMH infectious diseases physician Kirsty Buising, found the hospital “rapidly controlled” the spread of coronavirus by adapting measures to target settings and demographics within the facility.
Of 262 staff identified as having the virus between July 1 and August 31, 15 (5.7 per cent) required inpatient care and 13 (4.9 per cent) received care via a “hospital in the home” service, while two were admitted to intensive care. None died.
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Daniel Andrews pledges $5.3bn for public housing a boost to vulnerable and jobs
The Andrews government has announced an unprecedented $5.3bn investment in public and affordable housing, pledging to build more than 12,000 dwellings over the next four years, creating approximately 10,000 jobs over that period.
The announcement comes after decades of underfunding of public housing in a state where Labor has been in power for 16 of the past 20 years, with Victoria until now having the lowest proportion of public housing per capita compared to other Australian states and territories, and one of the lowest in the OECD.
Productivity Commission figures show that since the Andrews government came to power in 2014, recurrent net expenditure on public housing fell annually until the 2018-19 financial year, when $11 million was added to 2014 levels.
Last financial year Victoria spent $75 per person on public housing, compared to $135 in NSW and $341 in the Northern Territory, with public housing making up 1.9 per cent of Victoria’s housing stock, compared with a 4.6 per cent average across the OECD.
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This pandemic will make a large proportion of the population richer
This RBA has flooded the system with cash and the next effect will be a property boom. Equities looks good too with the highs from February within our sights.
Vimal Gor
Nov 16, 2020 – 7.46am
This has been a recession like no other.
Financially, most recessions have many losers and very few winners. This time around the picture is far more mixed. Some have been hit very hard. But many have emerged massively better off.
Tragically, small businesses, particularly in hospitality, where people get off their arses and create their own living, have felt the full impact. Public servants and most employees in big business, cashing their guaranteed pay cheques, have actually got richer.
Most super funds are back to levels of a year ago and real estate prices are actually higher in many places. Hardly a standard recession.
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This is what catching COVID-19 actually feels like
· The Times
For us, Covid started while we were walking the dog. We bicker, my wife and I, because she likes to walk very quickly and I don’t and, look, don’t judge us, we’ve been together since we were students and we’ve got to talk about something. This time, though, she was lagging. “Bit breathy,” she said, and we both knew at once, although not really. The next morning she was worse, so we took her for a test.
The rules are clear-cut, but reality never is. You think you’ll know when it comes. You’ll have the textbook symptoms and you’ll pull the kids out of school, cancel everything, call everybody you’ve seen, batten down the hatches.
What, though, if it’s not like that? What if you just feel a bit … rubbish? Do you cause all that disruption every time? As a diligent hypochondriac, I’ve personally been crying wolf at myself since March. As a result, like some special sort of madman, I have learned to roll my eyes at myself, however bad I feel, and assume I’m only pretending.
Her test, though, came back positive, and her fever spiked, and she took to her bed. “No more school for a bit,” we told the kids, and they cried, miserably, because they remember the grim house arrest of spring.
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https://www.afr.com/policy/health-and-education/what-can-the-new-vaccines-deliver-20201117-p56f73
What can the new vaccines deliver?
The world is relieved at new inoculations against COVID-19. They will fix the symptoms – but can they stop its spread?
Christopher Goodnow Contributor
Nov 17, 2020 – 3.05pm
The reports of 90 per cent protection against COVID-19 in the Pfizer-BioNtech vaccine clinical trial, and 94 percent protection in the Moderna trial, provide reasons to celebrate medical science. The coronavirus war is turning our way, but we’ve a long way to go.
How long before physical distancing measures relax and international travel opens up? That question hinges upon what kind of “protection” is conferred by these vaccines.
Our immune system can protect us from getting sick with COVID-19, and it can stop us from transmitting the virus to others. These two measures of immunity are separate things – having one does not imply having the other.
The many asymptomatic SARS-CoV-2 virus spreaders make that point loud and clear, and are the reason why this bat coronavirus has infected millions of people whereas the last one – SARS – was contained at 8098 people.
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Sweden realises that it’s not a nation apart after all
· The Times
Alarm is rising in Sweden that its light touch approach to Covid-19 has failed as its per capita infection rate rises above Britain’s, with the number of hospital admissions almost doubling each week.
“The situation is serious,” Goran Hansson, a cardiology professor at the Karolinska Institute and head of the Swedish Royal Academy of Sciences, said.
“Intensive care units are not at maximum capacity but may become full soon if the trend is not broken.”
Source - World Health Organization, Australian Government, AAP, Reuters, Johns Hopkins, other media.
Since the start of the pandemic the Swedish “experiment” has raised profound questions about the best way to overcome the disease and the nature of the state’s duties to its citizens.
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Insurers play hardball on COVID-related claims of billions of dollars
By Adele Ferguson
November 21, 2020 — 12.01am
Josephine Woodberry refuses to go away. After running a dance and performing arts school for more than 20 years and pouring everything into it, she is battling to get her insurance company to make good on her claim.
Woodberry had a business interruption insurance policy with AXA XL, which she took out through her insurance broker, to cover her if things went wrong in her dance business, located in Preston, just north of Melbourne’s CBD.
When the dance studio for 3-18-year-old children was closed for seven months due to the COVID-19 related lockdown, she rang her broker to lodge a claim. She was told her policy didn’t cover the global pandemic.
"The financial impact for me has been astronomical," said Woodberry, a single mother of two. "I have accrued significant debts and the associated stress and uncertainty of dealing with the insurer and having to get lawyers involved has taken a significant toll on my wellbeing."
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Climate Change
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https://www.afr.com/companies/energy/agl-plans-huge-battery-in-south-australia-20201114-p56em6
AGL plans huge battery in South Australia
Angela Macdonald-Smith Senior resources writer
Nov 15, 2020 – 4.01pm
AGL Energy has unveiled ambitions to build a huge new battery at its Adelaide power generation site as part of the next stage of its strategy to roll out 850 megawatts of storage across the National Electricity Market by 2023-24.
The system is to be installed at the site of the Torrens Island power station and built in stages up to a capacity of 250 MW, with storage of up to four hours. A final go-ahead to build remains subject to finalising contracts and approvals.
The battery is the latest mega-storage project announced in Australia in recent weeks, after French player Neoen announced its Victorian Big Battery that will have output of 300 MW and 450 MWh of storage, and NSW grid owner TransGrid flagged a storage project in Sydney's west involving 50 MW and 75 MWh.
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https://www.afr.com/policy/energy-and-climate/no-future-in-cheap-gas-led-recovery-20201112-p56e61
No future in cheap gas-led recovery
Draining low-cost supplies and abating climate change will makes gas an expensive energy choice, so the best thing for manufacturing is government support for a transition to low-emission replacement technologies.
Tony Wood Contributor
Nov 16, 2020 – 12.00am
Science and economics mean that the way we use natural gas must begin to fundamentally change. Accepting the change and dealing with its consequences will be hard for the gas industry, its customers and for governments.
A hard-headed analysis of gas supply on the east coast of Australia shows that gas prices are unlikely ever to return to the levels of previous decades. Gas has become an expensive energy choice as we have run down the sources of low-cost supplies. And gas is a fossil fuel, the production and use of which contributes almost 20 per cent of Australia’s greenhouse gas emissions. The implicit cost of gas in a low-emissions future will only rise in coming decades.
In a new Grattan Institute report, Flame out: the future of natural gas, we dissect these challenges and provide recommendations on how they should be addressed.
Many gas producers envisage an ongoing, long-term role for their product. Gas network businesses hold assets whose value could decline steeply if gas usage declines; gas-intensive manufacturers depend on gas as an essential feedstock or as an important business input; and households and small businesses value gas as a choice for cooking and heating. It is unsurprising that denial and resistance present governments with a wall of concerns.
There is widespread business support for policy action on climate change. There is far less agreement on what form this should take. In the case of gas, while there are low-emission alternatives, the economics of the options and the best timing for change are far from clear and vary by sub-sector.
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Royal Commissions And The Like.
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https://www.afr.com/chanticleer/super-trustees-told-don-t-hug-the-index-20201118-p56fsc
Super trustees told: 'don't hug the index'
After sowing confusion among fund managers and superannuation trustees with the release of new super fund performance benchmarks, the federal government is, in effect, urging trustees to adopt more risky investment strategies.
Nov 19, 2020 – 12.00am
Australia's superannuation trustees have been told in no uncertain terms by the federal government not to hug the passive benchmark indices that will be used by regulators to "name and shame" underperforming super funds.
Also, trustees have been urged not to abandon the environmental, social and governance (ESG) principles that have underpinned sustainable investment strategies and are the drawcard for Millennial super fund flows.
This long overdue message to trustees responsible for $2.9 trillion in super assets was delivered by the Assistant Minister for Superannuation, Jane Hume, during The Australian Financial Review Banking and Wealth Summit on Wednesday.
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National Budget Issues.
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https://www.afr.com/chanticleer/philip-lowe-shares-a-big-worry-with-mmt-hero-20201117-p56fa6
Philip Lowe shares a big worry with MMT hero
RBA governor Philip Lowe scoffs at Modern Monetary Theory. But he shares concerns about how to get economies moving again with a key proponent of the radical theory.
Nov 17, 2020 – 11.40am
Reserve Bank of Australia governor Philip Lowe and Modern Monetary Theory proponent Pavlina Tcherneva are poles apart on how economies should operate.
But on Tuesday morning, as Tcherneva addressed the UBS Australasia conference just 12 hours after Lowe delivered a major speech on the economy, it seemed the pair's big worry about the COVID-19 recovery is actually pretty similar.
Lowe has little time for Modern Monetary Theory, and he’s not afraid to show it.
“It’s called Modern Monetary Theory, but there's actually not much monetary, not much modern and not much theory,” Lowe quipped on Monday night at the annual CEDA dinner. “It's really a theory about a series of propositions about fiscal policy.”
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'Time of reckoning': Loan deferrals falling but warnings worst to come
By Charlotte Grieve
November 18, 2020 — 12.00am
Australian Banking Association chief executive Anna Bligh says home and business owners will have to make tough choices next year as loan deferral plans and government stimulus packages come to an end.
New data from the ABA shows the total number of deferred loans has fallen by almost 70 per cent to around $86 billion, down from a peak of $250 billion in June.
Deferred business loans at the country's seven largest banks have fallen by 68 per cent to 72,909 and mortgages have fallen by 66 per cent to 169,677, according to ABA data up to November 4.
Ms Bligh said it was an "encouraging sign" that the majority of customers had started making repayments but acknowledged many were still struggling. "There are still a lot of people in these numbers who are not yet back on making their payments," she said. "There is a time of reckoning ahead."
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How a resilient financial system supports the recovery
The federal government is pursuing structural financial reforms that will boost the post-virus economy and bring better consumer outcomes.
Josh Frydenberg Treasurer
Nov 18, 2020 – 12.00am
COVID-19 has been a stress test for the global economy.
Monetary policy, fiscal policy, supply chains and national institutions have all come under the spotlight and, in many cases, been found wanting.
However, Australia has fared better than most.
Our health and economic response has seen the virus suppressed and the economic recovery under way.
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Unemployment creeps up to 7% in October but underemployment drops sharply
November 19, 2020
The unemployment rate inched higher from 6.9 per cent to 7 per cent in October as the economy added 178,800 jobs, with Victoria accounting for close to half of the month’s lift in employment as the state emerged from lockdown.
Nationally, there were 97,000 full-time jobs gained in the month, while part-time employment rose by 81,800, according to seasonally adjusted data from the Australian Bureau of Statistics.
ABS head of labour statistics Bjorn Jarvis said the “strong increase” in jobs and hours worked “reflects a large flow of people from outside the labour force back into employment”. Employment levels in October were only 1.7 per cent below pre-pandemic levels in March, Mr Jarvis said.
The participation rate lifted by a solid 0.9 percentage points to 65.8 per cent, and the increase in the workforce accounted for the increase in the jobless rate even as the economy added jobs.
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Who would be a financial regulator, as criticism builds from all corners?
Who would be a financial regulator? The politicians blame you when corporates play up and then blame you when the recovery isn’t happening as it should.
Case in point being Treasurer Josh Frydenberg’s attack on ASIC as putting too much red tape in the way of banks trying to get on with lending money to consumers and business.
Ask any of the big banks and they will unequivocally say the problem with lending is lack of demand not red tape.
Some will admit to being a little cautious to explain loss of market share but the reality is there are not a lot of demands for new credit amid the present uncertainty.
The good news is the economy is actually responding better than predicted and banks are upgrading their economic forecasts accordingly.
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https://www.afr.com/policy/economy/rba-could-have-to-expand-qe-beyond-100b-20201113-p56eh0
NSW debt burden may force RBA's hand
Matthew Cranston Economics correspondent
Nov 19, 2020 – 11.34am
The Reserve Bank might have to increase its $100 billion quantitative easing program, especially to state governments, after the NSW budget revealed a bigger debt burden than expected and borrowing costs for governments have drifted up again.
The RBA has committed to buying about $20 billion of state government bonds, known as semis, as part of the new formal $100 billion bond-buying program. It had been buying semis before the latest QE announcement.
However, the NSW government debt manager TCorp announced on Tuesday that a total funding requirement of $36 billion would be needed, rather than the expected $25 billion.
NAB's senior fixed income strategist, Ken Crompton, said the debt burden now affected pricing.
"The program is bigger than expected and has triggered a material repricing of semis from most issuers, with TCorp slightly harder hit," he said.
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Callaghan opens new front in raging super wars
The retirement income review has handed the Morrison government the ammunition to freeze compulsory super rises not just during the pandemic, but indefinitely.
Aleks Vickovich Wealth editor
Nov 19, 2020 – 10.30pm
The long-awaited retirement income review chaired by Treasury official Mike Callaghan will not spark a total overhaul of Australia's $3 trillion pension system, but it may put a dent in Big Super's once-invincible stranglehold over it.
The review concludes that without compulsory superannuation, many workers would fall short in retirement and that the system is broadly effective and sustainable.
That is probably about where any nodding agreement from readers in the superannuation industry, federal opposition and labour movement will end.
Early extracts from the report conjure a vision for Australia's retirement system taken straight from the minutes of a suburban Liberal branch meeting: the supremacy of home ownership in wealth creation, importance of voluntary savings and diminished role for mandatory superannuation contributions by employers.
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'Tax minimisation strategy': $90b stashed in richest funds
Michael Roddan Senior companies reporter
Nov 20, 2020 – 12.10pm
The wealthiest superannuation savers with balances over $5 million have tucked away more than $90 billion in their accounts and are receiving more government support than low income households, in concessions deemed “not required” and a “tax minimisation strategy” by the government’s retirement income review.
The review has suggested the government should reform the billions in concessions flowing to the wealthiest savers, finding that the provision of tax concessions for very large superannuation balances “are not required for retirement income purposes, as they are unlikely to encourage additional saving”.
“It appears that large balances are held in the superannuation system mainly as a tax minimisation strategy, separate to any retirement income goals,” Treasury’s Retirement Income Review says.
“The impact of earnings tax concessions means higher-income earners receive more lifetime government support in dollar terms than lower- and middle-income earners.”
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Retirees ignoring potential of dipping into home equity: income review
By Jennifer Duke
November 19, 2020 — 10.30pm
Cash-poor retirees living in expensive properties are not tapping into their housing equity to fund their older years, despite the family home representing the biggest share of net wealth for those aged over 65.
Getting homeowners to consider schemes like reverse mortgages to fund their retirements has been highlighted in a briefing note by the federal government as a major finding from a 600-page Retirement Income Review set to be unveiled on Friday.
It said accessing home equity could have a "bigger impact on improving retirement income than increasing the superannuation guarantee".
The full review has not been publicly released, and does not make recommendations, but some of the findings could threaten the legislated superannuation guarantee rises to 12 per cent by 2025. The first of the 0.5 per cent increases is due next year.
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https://www.afr.com/policy/tax-and-super/the-battle-for-your-retirement-20201120-p56gbh
Super wars: The battle for your retirement
The superannuation review could be a turning point in how Australians fund their lives.
Aaron Patrick and Aleks Vickovich
Nov 20, 2020 – 12.53pm
Voters, get ready for the upside-down world of superannuation politics. A Liberal government has embarked on a titanic battle with capital over your retirement savings.
On the side of themselves, the Coalition would have you believe, are millionaire fund managers, super trustees, stock brokers, asset consultants, lobbyists and other highly paid members of the superannuation industry, alongside their clandestine if unlikely fellow-travellers in the trade union movement.
Standing up for working Australians, according to Treasurer Josh Frydenberg, is a government that looks eager to end what was previously regarded as the inexorable growth of state-mandated savings.
The stakes are huge. Cancelling the gradual increases in the superannuation guarantee from 9.5 per cent to 12 per cent in 2025 would deprive the industry of some $45 billion by 2025.
A web of interests that controls close to $3 trillion and stretches from bank boardrooms via trade union headquarters to the Labor shadow cabinet is going to use its considerable resources and institutional leverage to kill the plan, first in the court of the public opinion, and second, in the Senate.
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https://www.afr.com/chanticleer/super-review-s-booby-traps-20201120-p56ghi
Super review's booby traps
The long-awaited review of the $3 trillion retirement income system gives it many ticks of approval. It also contains some unpleasant surprises for the Morrison government.
Nov 21, 2020 – 12.00am
In some respects the Morrison government got exactly what it wanted from Mike Callaghan's Retirement Income Review – a nail in the coffin of a higher superannuation guarantee charge.
Prime Minister Scott Morrison, Treasurer Josh Frydenberg and assistant superannuation minister Jane Hume now have the independent "proof" they need to claim higher compulsory super will be at the expense of wages growth.
The counter factual, of course, is that when prime minister Tony Abbott delayed the introduction of an increase in the super guarantee in 2014 (with the helped of Clive Palmer), wages growth stagnated.
Economists can argue until the cows come home about the likely future effects of policy changes and, in doing so, plug in whatever assumptions suit their case.
Getting people to spend their retirement savings is the main game
By Shane Wright
November 20, 2020 — 7.00pm
One of the first things people getting financial advice are told is to read the fine print.
Those thinking that holding the superannuation guarantee at 9.5 per cent will be a salve for all the problems around wages and retirement income need to look carefully at everything in the 638-page report dropped by the federal government on Friday.
The income review report sets out many of the issues bedevilling the retirement income system.
Most attention, especially within the backbench of the Morrison government, has been on the legislated increase in the superannuation guarantee to 12 per cent by 2025.
The report goes into a large amount of much-needed analysis of this policy, which has been a key part of retirement incomes and the broader economy since its introduction by the Keating government.
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Health Issues.
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Top doctor resigns TGA role over concerns with policing of fringe medicine
By Liam Mannix
November 16, 2020 — 11.30pm
A leading medical campaigner has resigned from the medical watchdog's advertising committee, citing years of frustration over its kid-glove treatment of complementary medicines.
The Therapeutic Goods Administration received 1468 complaints in 2018-19 about advertisements for drugs and devices, many of them alleging herbal supplements, fat burners and hangover cures were being sold with wild and unsupported claims about their effectiveness.
Nearly all the complaints were upheld. But despite having the power to issue penalties, in most cases the TGA opted to send only an advisory letter, according to a study led by Associate Professor Ken Harvey and published in the Australian Health Review.
In 2018 federal Health Minister Greg Hunt appointed Dr Harvey as the representative of consumer organisation and magazine Choice to the TGA's advertising consultative committee, a panel of industry, media and consumer representatives who work with it on advertising compliance.
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Medical schools tithed for regions
Established medical schools stand to lose up to 160 commonwealth-supported places over the next five years under a scheme that will feed them into a new medical school at Orange, 250km west of Sydney.
The move has left the medical deans’ peak body frustrated with the federal government and revealed uncertainties in the medical workforce strategy exacerbated by the COVID-19 crisis.
While five of 37 places at the joint Charles Sturt University-Western Sydney University medical school due to open in February are new, the rest have been tithed from universities with more than 100 medical places, Medical Deans of Australia and New Zealand vice-president Michelle Leech said. “I think most of the universities are losing between one and four of their CSP medical places over up to five years and that obviously adds up,” Professor Leech said.
Although the deans were aware the federal government was looking for the places among the current CSP allocation, the 1 per cent idea was not among three options put to them last year in a discussion paper, and on which they provided feedback.
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'We have not delivered': Dozens of Australian COVID trials fail to learn anything new
By Liam Mannix
November 20, 2020 — 11.45pm
Millions of taxpayer dollars have been spent on dozens of Australian COVID-19 clinical treatment trials that have so far largely failed to produce any new scientific knowledge.
Researchers said a lack of national leadership meant far too many clinical trials were set up for a range of potential COVID-19 drugs and that they had competed with each other for a limited pool of patients.
Hospitals often found themselves with multiple patients on different trials. And hospital administrators often took more than three months to approve trials, meaning the epidemic had died down by the time scientists were ready to enrol patients.
"We have not delivered for the community. We still don't have a therapeutic to treat people with, even though we have the best research minds in the country and a lot of resources," said Professor Jennifer Martin, chair of clinical pharmacology at the University of Newcastle and an investigator on the CLARITY study.
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International Issues.
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https://www.afr.com/markets/currencies/the-rbnz-has-shredded-its-credibility-20201115-p56eps
The RBNZ has shredded its credibility
The Reserve Bank of New Zealand has authored the most activist monetary policy on the planet, while ignoring the facts on the ground.
Grant Wilson Contributor
Nov 15, 2020 – 1.07pm
Way back in May we highlighted that the Reserve Bank of New Zealand was putting its credibility on the line with its aggressive second round response to COVID-19.
We described the expansion of the Large Scale Asset Purchase (LSAP) program as unnecessary and untimely.
Local bond market conditions had already normalised from the disruption seen in late March, and the prospect of a V-shaped recovery was showing through in various datasets as a function of New Zealand having successfully pursued an elimination strategy for COVID-19.
We also raised concern that the RBNZ was moving beyond the traditional level of co-operation with Treasury, in rolling out LSAP program in close conjunction with the annual Budget announcement.
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America's central problem is class not race
A dash less contempt for those with less education, plainer speech and more traditional views might be a way to start bridging the empathy gap that has pushed voters towards Donald Trump.
Rana Foroohar Contributor
Nov 16, 2020 – 9.59am
Race is often a central issue in American political life. But, as the 2020 presidential election has just shown us, class is a topic that matters just as much, perhaps even more, at least in terms of votes.
While the Republican incumbent, Donald Trump, won a majority of small towns and rural areas, his Democratic challenger, Joe Biden, took communities that represent a whopping 70 per cent of the US economy, according to Brookings Institution data.
No matter where voters were in the country, if they lived in an economic growth hub, it’s likely that they voted for Mr Biden.
This tells us some important things about America. First, that wealth and power are concentrated in just a few places. When you look at an electoral map of the US, it is overwhelmingly red, except on the coasts and a few inland urban areas.
More than two-thirds of US job growth since 2007 has been concentrated in 25 cities and regional hubs, according to the McKinsey Global Institute.
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China's new wolf warrior diplomacy is a Maoist resurrection
By Anne-Marie Brady
November 16, 2020 — 12.10am
Last Friday, China’s foreign ministry threatened counter-measures against Australia for speaking up on its crackdown against democracy in Hong Kong. On the same day, China’s Ministry of Culture and Tourism launched a pro-Australia tourism campaign aimed at bringing the two countries closer together. Over the past two weeks, China has gaslighted the Australian government with a series of contradictory statements on trade, as well as the overall relationship.
China is following a belligerent foreign policy which singles out countries such as Australia for punishment, as examples to other governments. Australia’s "offence"? Simply put: passing laws aimed at protecting the political system against Chinese Communist Party interference, launching freedom of navigation exercises in the international waters of the South China Sea through which the bulk of Australian shipping passes and daring to ask the Xi government to examine the origins of the COVID-19 outbreak that unleashed the devastating global pandemic.
Mao Zedong told China’s first diplomats: “Diplomatic work is a political struggle; you don’t engage in a war of weapons, you engage in a war of words.” Xi-era foreign affairs is engaged in a war on almost all fronts as well as a war of words. The CCP leadership evidently believes it is in a position of strength vis-a-vis the United States, the European Union, Japan, Australia and other Western governments.
Soon after to coming to power in 2012, President Xi Jinping introduced a reset in China’s foreign affairs policy. The CCP government’s approach to foreign affairs includes a detailed foreigner management strategy. Putting pressure on individuals as substitutes for their governments is one of the first signs of a deterioration in the relationship, as Australia’s China journalists and China analysts have now experienced first hand. Two Australians, several Canadians, and at least one American have been arrested on spying charges. Scores of foreign teachers in China have also been arrested on sometimes spurious allegations.
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Governors plead for action as US passes 11m virus cases
Paulina Firozi and Hannah Knowles
Nov 16, 2020 – 11.16am
Washington | Coronavirus cases in the United States passed 11 million on Sunday (Monday AEDT) as the nation shattered records for hospitalisations and daily new infections and leaders turned to new restrictions to stem the pandemic's long-predicted surge.
The milestone came a week after US hit 10 million cases, a testament to how rapidly the virus is spreading – the first 1 million cases took three months. This new wave has pushed COVID-19 hospitalisations past the peaks seen in April and July, straining healthcare systems and pushing some reluctant Republican governors to enact state-wide mask mandates for the first time.
Other states are re-enacting stay-at-home orders and store closures. Washington's Democratic governor, Jay Inslee on Sunday announced a slew of new rules, including a halt to indoor operations at restaurants, bars and gyms and a ban on indoor social gatherings with people outside one's household.
Speaking to reporters, Mr Inslee acknowledged that slowing the virus would come at a steep price for struggling businesses even as the state works to distribute millions more in aid.
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New world orders: What Biden means for the rest of us
By Eryk Bagshaw, Bevan Shields, James Massola, Maher Mughrabi, Lia Timson, Chris Zappone and Matt Wade
November 16, 2020
In his Delaware victory speech, President-elect Joe Biden declared that "this is the time to heal in America". But bitter partisan conflict, rising racism and nativism, misinformation and fears for democracy and human rights aren't just a problem for the United States but for the whole world.
Since World War II, nations in every corner of the world have either looked hopefully to the US for leadership in tackling major global and regional challenges or been forced to reckon with Washington's interventions.
On climate change, global trade, immigration and a host of other issues, Biden has pledged that leadership will come "not only by the example of our power but by the power of our example".
Can the new administration return Washington to its place at the head of the international table as a guarantor of the "rules-based order"? Or will the Biden administration be forced to contend with a new multipolar reality in which nations tend to their own patches?
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https://www.afr.com/markets/equity-markets/investors-caught-in-cold-war-ii-crossfire-20201116-p56eus
Investors caught in Cold War II crossfire
Robert Guy Senior Writer
Nov 16, 2020 – 3.50pm
Renowned economic historian Niall Ferguson says China is making an example of Australia to highlight the dangers to other Asian economies of challenging its power, underscoring the need to cement relations with the incoming Biden administration to ensure Canberra isn't isolated amid deepening trade tensions.
He warned that what he terms Cold War II will not end with the exit of US President Donald Trump from the White House, warning the election of Joe Biden will not lead to a wholesale reversal of the more assertive approach to dealing with China's rise as an economic and military challenger to the US.
"Joe Biden's national security team is not going to try and turn the clock back to 2016," Mr Ferguson told the UBS Australasia conference.
"So nobody should expect a reset that takes us back in time to the later Obama years. That isn't an option."
He said likely appointments such as former Obama staffer Michèle Flournoy as defence secretary or Kurt Campbell, who may play a role in China policy, had become "significantly" more hawkish on US China relations.
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Why Europe faces a long, slow convalescence from coronavirus
Hans van Leeuwen Europe correspondent
Nov 16, 2020 – 1.44pm
London | The locked-down centre of London is not a pretty sight just now. The streets are eerily deserted: Covent Garden, Oxford Street and Regent Street have their Christmas lights up, but the pavements are bereft of the traditional seasonal throng of shoppers.
Security guards in high-vis jackets are everywhere, keeping the shuttered shops safe. In almost the only sign of normalcy, a few men in hard hats are digging up London's roads, as usual.
Beyond the city's ring road, though, factories are still pumping and office workers are Zooming from their spare bedrooms. But the world of shops, cafes, restaurants, pubs, bars, nail and beauty salons, hairdressers and hotels is a largely silent one.
The economic pain from the second COVID-19 lockdown won't match the first: it's only supposed to last until early December; businesses are better prepared; e-commerce is taking up some slack; and construction and manufacturing are ploughing on.
But the ubiquitous "Closed" signs on so many service-sector doors tell us that although the second dip will be shallower, the climb out of this economic hole could be long and arduous.
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https://www.afr.com/world/north-america/when-a-leader-just-won-t-go-20201116-p56ey0
When a leader just won’t go
Donald Trump may need to be nudged out, as he has chosen a time warp of alternative reality, where he will continue to be in office even after being voted out.
Sarah Lyall
Nov 16, 2020 – 12.53pm
As America ponders the awkward case of Donald Trump, a president who will not admit that he has been fired, it is helpful to consider him through the experiences of other people, fictional and otherwise, who have been unable to accept the arrival of unwelcome developments in their personal and professional lives.
Is Trump like King Lear, raging naked on the heath and desperately hanging on to the increasingly diminished trappings of power even as they are stripped from him? Or is he more like Bartleby the Scrivener, the inscrutable model of passive resistance in Herman Melville's short story of that name who one day declines to do any more work or indeed leave the building, declaring: "I would prefer not to?"
Is he like Nellie, the character in The Office who installs herself at the desk of the regional manager when he is out of town and unilaterally appoints herself boss? Or how about George from Seinfeld, who quits one of his many jobs in a huff, unsuccessfully tries to get it back and reports to work anyway, as if nothing had happened?
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Trump national security adviser says it looks like Biden has won
November 17, 2020 — 4.27am
Washington: US President Donald Trump's national security adviser, Robert O'Brien, says he will ensure a professional transition to the team led by Democrat Joe Biden if Biden is deemed the winner of the 2020 presidential election and "obviously things look like that now".
Trump has insisted without evidence that the November 3 election was "rigged" and that he will be declared the winner after a series of legal challenges in several states.
Speaking to the Global Security Forum, O'Brien said that while he hoped Trump would turn out to have won a second four-year term, he would work with a new administration headed by Biden and his vice-presidential running mate, Kamala Harris.
"If there is a new administration, look, they deserve some time to come in and implement their policies," O'Brien said.
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‘Do your duty’: Sweden rolls out new restrictions to combat spread of COVID-19
Sweden’s prime minister warned the country the spread of coronavirus was “going to get worse” as he introduced fresh laws limiting the numbers of people being able to gather.
From next week Sweden, only eight people will be permitted to gather at public events, with officials strongly encouraged people to adopt the same limit in private.
Prime Minister Stefan Löfven said the new limits were part of the Public Order Act and would apply for four weeks.
“It’s going to get worse,” he told a press conference on Monday. “Do your duty and take responsibility to stop the spread of infection.”
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https://www.afr.com/world/north-america/biden-s-flawed-plan-for-global-leadership-20201117-p56f7c
Biden’s flawed plan for global leadership
The president-elect will find it hard to persuade Americans that the US can benefit from international engagement, without automatically taking the leadership role.
Gideon Rachman Columnist
Nov 17, 2020 – 9.11am
Governments all over the world are studying an article that appeared last January headlined – “Why America Must Lead Again”. The author is one Joe Biden.
Mr Biden’s essay for Foreign Affairs laments that the Trump administration has “abdicated American leadership”. It promises that “the Biden foreign policy agenda will place the United States back at the head of the table”.
But it is much easier for the President-elect to talk about re-establishing American leadership than actually to deliver.
The US is not as powerful as it once was. Simply rejoining international groups – the World Health Organisation or the Paris climate accord – does not put America “at the head of the table”.
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American 'dark winter' looms as states brace for surge
Jacob Greber United States correspondent
Updated Nov 17, 2020 – 3.57pm, first published at 9.43am
Washington | America is rapidly accelerating towards its biggest COVID-19 disaster to date as a wave of infections threaten to overwhelm hospitals, forcing states from California, Oregon, Washington and New Jersey to scrap reopening plans and impose restrictions.
As new cases surged by the most since the pandemic began at the start of the year, President-elect Joe Biden warned that "more people may die" if departing President Donald Trump keeps blocking a transition of power.
President-Elect Joe Biden has urged the US to work together in combating the pandemic.
The worsening outcome comes after almost two weeks of daily COVID cases leaping up by more than 100,000, and a death-toll fast closing in on a quarter of a million people.
Even as Mr Biden met with business and labour leaders on Monday (Tuesday AEDT) – including the chief executives of General Motors, Microsoft, Target and the Gap – much of their focus was on how to keep manufacturing going safely amid the potential for new lockdowns.
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US announces Gulf troop draw down just days from Biden's inauguration
Jacob Greber United States correspondent
Nov 18, 2020 – 6.48am
Washington | Donald Trump's hastily appointed acting Pentagon chief has announced a drawdown of US troops in Iraq and Afghanistan to take effect five days before Joe Biden takes office, throwing fresh doubts of Australia's involvement in the region.
Acting secretary of defence Christopher Miller said the order would reduce the number of troops in Afghanistan in January from about 4500 to 2500, and in Iraq by about 500 to 2500.
The announcement was made in defiance of warnings from one of Mr Trump's closest allies in Congress – Senate majority leader Mitch McConnell, who likened it to America's "humiliating" departure from Saigon in 1975.
"The consequences of a premature American exit" from Afghanistan "would likely be even worse than President Obama’s withdrawal from Iraq back in 2011, which fuelled the rise of ISIS and a new round of global terrorism", Senator McConnell said.
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Trump's controversial ploy that would snooker Biden is running out of time
Stephen Bartholomeusz
Senior business columnist
November 18, 2020 — 11.32am
Donald Trump’s attempt to appoint an ardent supporter and Federal Reserve Board sceptic to a seat on the board of the world’s most powerful central bank, snookering the incoming Biden administration in the process, is faltering.
On Tuesday (US time), Republicans weren’t able to secure sufficient votes in the Senate to confirm Judy Shelton’s nomination for a seat on the Fed’s board of governors.
That doesn’t completely rule her out – her nomination can be brought before the Senate again – but time is rapidly running out to install the controversial former Trump adviser to one of the two vacant seats on the board. The other is likely to be filled by the less controversial and well-credentialled Christopher Waller, an economist with the St Louis Fed.
Time is running out because, with three Republican senators already opposed to her candidacy and Democrat Mark Kelly, who won a special election in Arizona earlier this month, likely to join the Senate on November 30, the window for a majority in favour of her appointment is closing. The Republicans currently hold 53 of the 100 Senate seats, with Vice President Mike Pence having a casting vote in the event of a tie.
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Walking dead: America's 'zombie' companies have racked up $1.9 trillion of debt
By Lisa Lee and Tom Contiliano
November 18, 2020 — 10.06am
They were once America's corporate titans. Beloved household names. Case studies in success.
But now, they're increasingly looking like something else -- zombies. And their numbers are swelling.
From Boeing, Carnival and Delta Air Lines to Exxon Mobil and Macy's, many of the nation's most iconic companies aren't earning enough to cover their interest expenses (a key criterion, as most market experts define it, for zombie status).
Almost 200 corporations have joined the ranks of so-called zombie firms since the onset of the pandemic, according to a Bloomberg analysis of financial data from 3000 of the country's largest publicly traded companies. In fact, zombies now account for nearly 20 per cent of those firms. Even more stark, they've added almost $US1 trillion ($1.4 trillion) of debt to their balance sheets in the span, bringing total obligations to $1.36 trillion ($1.9 trillion).
That's more than double the roughly $US500 billion zombie companies owed at the peak of the financial crisis.
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https://www.afr.com/policy/economy/why-inflation-could-be-on-the-way-back-20201118-p56fle
Why inflation could be on the way back
The global economy may be shifting as it did four decades ago.
Martin Wolf Columnist
Nov 18, 2020 – 11.15am
Are we about to move into a new era of unexpectedly high inflation, rather than the below-target inflation we are used to? Many dismiss this view. But the boy who cried wolf was right the last time. A book just out is crying wolf insistently.
Notably, it states that, as a result of today’s fiscal and monetary largesse, “as in the aftermath of many wars, there will be a surge in inflation, quite likely more than 5 per cent, or even on the order of 10 per cent in 2021”. That would change everything.
The prediction comes from Charles Goodhart, a respected academic, and Manoj Pradhan, formerly at Morgan Stanley. Its prophecy of imminent inflationary doom is in fact less significant than its analytical framework.
These authors argue that the world economy is about to shift regimes. The last time this happened was the 1980s. The big shifts four decades ago were not so much the desire to bring inflation under control, but globalisation and the entry of China into the world economy. That era, they argue, which was one of low inflation and high, rising indebtedness, is now ending. Its inverse will soon follow.
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Trump’s tantrum gives America’s foes opportunity for mischief
- The Times
- November 18, 2020
Shifting power between outgoing and incoming American presidents is a delicate operation, like carrying a Ming vase across a busy road. Drop this particular bit of political crockery, though, and you do more than expensively embarrass yourself. You invite America’s foes to jostle for advantage and you make Washington, already exhausted by a bruising election campaign, look enfeebled and distracted.
With just over two months to go before Joe Biden’s inauguration, Donald Trump seems to be pursuing a scorched earth policy. He has sacked Mark Esper as defence secretary and a cluster of senior Pentagon officials because they oppose Trump’s plan to bring home thousands of US troops from Afghanistan, Iraq and Somalia before the handover. That would honour an election pledge but, perhaps more importantly, hand Biden a foreign policy crisis in his first weeks in office. Accelerating the removal of most of the 4,500 troops in Afghanistan might just be possible by January but it would be physically impossible to extract the heavy military kit. And it would immediately become impossible to monitor a key part of Trump’s deal - to separate the Taliban from al-Qaeda.
Biden doesn’t want to be handed a Vietnam-style humiliation: the looting of abandoned American equipment and Taliban crowing over the fickleness of American power. But that’s the consequence of the menu being prepared for him in the twilight White House. So, too, is the proposal to list Yemen’s Houthi rebels as terrorists, putting paid to any swift peace deal there. New sanctions seem to be on the cards for the Iranian regime. Biden’s advisers interpret this as a Trump ploy to anger Tehran, harden its anti-American stance and thus kick into the long grass any chance of reviving the agreement that curbs Iran’s nuclear programme.
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Defence pact confirms Japan's forward lean into regional partnership
The united front between Japan and Australia shows both countries are on the same strategic page about maintaining order and preventing Chinese domination in the Indo-Pacific region.
Rory Medcalf Contributor
Nov 18, 2020 – 4.41pm
Prime Minister Scott Morrison’s visit this week to Tokyo neatly bookends the Trump years in our Indo-Pacific region.
How so? Japan and Australia have deepened their security ties, enabling them to present a united front to engage America’s incoming Biden administration.
This augments another regional pillar, the India-Japan partnership affirmed when Indian Prime Minister Narendra Modi journeyed to Tokyo in November 2016.
Now in elegant symmetry, the four democracies this week have joined forces for the Malabar naval exercise in the Indian Ocean. Grey hulls arrayed in the sea lanes make a starker statement of quadrilateral solidarity than any euphemism-laden joint communique.
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The fault lines in China's economy have been exposed
Senior business columnist
November 19, 2020 — 11.41am
There has been a spate of Chinese companies defaulting on their bond repayments in the past few weeks, sending anxious ripples through the market that have even touched China’s sovereign bond yields and caused its central bank to pump liquidity into its bond market to try to calm it.
While there’s something of a focus of concern on the coal mining sector, which was hit hard by the impact of the coronavirus on demand, it isn’t confined to that sector.
On Monday chip maker Tsinghua Group (also known as Unigroup) – a state-backed entity controlled by Tsinghua University and regarded as one of the stars of Beijing’s push to reduce its reliance on imported semiconductors – defaulted on a 1.3 billion yuan ($270 million) bond redemption that was due that day.
Last week state-owned Yongcheng Coal & Electricity Holding Group was unable to repay a 1 billion yuan bond, which sent shudders through the entire sector, tanking bond prices, and triggered an investigation by the bond market regulator into its disclosures. Other coal companies cancelled planned bond issues or shrunk the size of their offerings.
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'A very dangerous situation': COVID restrictions spread across US
By Matthew Knott
November 19, 2020 — 11.43am
Washington: State and city leaders across the US are rapidly introducing new restrictions to stop the spread of COVID-19 as infections and hospitalisations spike nationwide.
The head of New York City's education system announced that all schools there would close from Friday (AEDT) and resume online-only learning after the city's test positivity rate hit three per cent.
With 1800 schools and 1.1 million students, New York's school system is easily the biggest in the country.
The announcement sparked immediate anger among parents given restaurants and gyms remain open for business in the city, albeit at reduced capacity.
New York's decision to close all schools is strikingly different to the approach in many European countries. France, Germany and the United Kingdom have ordered many businesses to close but have made it a priority to keep schools open.
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Trump lets his isolationist instincts run free with troop withdrawals
By Matthew Knott
November 18, 2020 — 1.07pm
Washington: When Donald Trump first ran for president in 2016, his isolationist foreign policy approach set him apart from his Republican opponents.
While calling for military spending to be increased, Trump also demanded an end to America's involvement in "ridiculous endless foreign" wars and for the government to bring home US troops stationed in the Middle East.
This went against the grain in a party that had been dominated by military hawks like George W Bush and John McCain. In fact, it was more common to hear these sentiments from the anti-war left of the Democratic Party. But Trump tapped into a growing sense of fatigue among Americans — including military veterans — about the country's role as a "global policeman".
Now, in the dying days of his presidency, Trump is working to fulfil a central campaign promise to be a commander-in-chief who dramatically reduces America's overseas military presence.
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China doesn’t like our Japan deal? Bad luck
So China doesn’t like Australia’s forward leaning posture, having signed a new strategic defence agreement with the United States and Japan. Bad luck. It says if we treat it like an enemy it will be an enemy. Fine.
It is the duty of democracies the world over to treat non-democracies with extreme caution. Especially non-democracies like China, which have shown an increased preparedness to expand their sphere of influence, twist arms internationally and defy basic international norms. The rise of authoritarian states is something to be fearful of, not something to tolerate.
To be sure, we are not dealing with a benevolent super power here. The rise of China is the world’s biggest security threat. Forget the skirmishes in the Middle East, or the craziness in places like North Korea. These are micro problems. China is a macro problem.
Its willingness to walk all over the rule of law and due process is something to be feared. The fact that we are so economically reliant on China doesn’t change that. If anything, it heightens the fear and the worry Australians should feel. Hearing China – in full knowledge of the power it wields – amplify its rhetoric when we do deals with our like-minded allies only serves to confirm the value of Australia tightening its defence and strategic alliances as China continues to rise.
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US 2020 election: ‘It’s like a horror movie that never ends’
Donald Trump’s graceless and disgraceful denial of an election he lost by the length of the straight amounts to the biggest dummy spit in US electoral history. The toys have been thrown out of the cot and caps set to lock so he can whine to the world on Twitter.
The oddest part about it is the man clinging to power by his manicured fingernails, appears to have no interest in leading the country.
The Covid pandemic is raging in the US. One million new cases have been diagnosed in the last six days. Deaths are running at 1300 a day across the country. A week ago, they were at 1000.
Besides a press conference on Saturday announcing a partnership with Pfizer whose vaccination has concluded clinical testing with impressive results, Trump has not said a word about the pandemic.
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Put up or shut up, Rove tells Giuliani over nutty conspiracy rant
Jacob Greber United States correspondent
Nov 20, 2020 – 7.19am
Washington | Rudi Giuliani, Donald Trump's personal lawyer, is coming under mounting pressure by leading Republicans to prove in court an extraordinary series of claims that he says are enough to overturn the election.
At a dramatic and often-bizarre press conference on Thursday (Friday AEDT), the former New York Mayor promoted a conspiracy-like theory that billionaire George Soros and Hillary Clinton effectively engaged in an effort with the long-dead dictator of Venezuela, Hugo Chavez, and his successor, Nicolas Maduro, to undermine the US electoral process.
"These are serious, I think, somewhat strange accusations," said Karl Rove, the former White House deputy chief of staff to president George W. Bush, who said Mr Giuliani and his co-accusers have an obligation to the American public to prove their claims or withdraw them.
"These [claims] are questioning the fundamental fairness of our presidential election and alleging that there are conspirators who worked in major cities in an organised effort to engage in widespread voter fraud and that foreign agents and powerful Americans, namely Soros and the Clinton Foundation were involved," Mr Rove said on Fox moments after the 90-plus-minute press conference ended.
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The Dow Jones doesn't tell you the real story of the sharemarket
By Allan Sloan
November 20, 2020 — 8.02am
Lots of people are making lots of fuss about the Dow Jones industrial average flirting with a nice new benchmark: 30,000. Watching the Dow is a terrific spectator sport, and you can be sure that more than a few bottles of champagne will be uncorked when we get a 30,000 Dow.
But let's remember the market indicator that really matters: the S&P 500 index. And let's take a closer look at the handful of stocks that are powering its rise.
The S&P is lots more important than the Dow because there's $US5 trillion ($6.9 trillion) or so of investor money indexed to it. That's more than 150 times as much as is tied to the Dow.
What's really striking about the S&P, which has risen sharply this month, is how much of its return so far this year comes from a mere half-dozen tech stocks that represent barely 1 per cent of the 505-stock index.
As of Monday's close in the US, the Big Six, as I call them - Apple, Amazon, Microsoft, Facebook and the two share classes of Google owner Alphabet - accounted for almost three quarters of the S&P's return for the year.
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Unmistakable threat: China gives up the charade on trade dispute with Australia
Eryk Bagshaw
China correspondent
November 20, 2020 — 11.30am
This week any pretence was dropped. For months, the trade dispute between Australia and China that has plagued 2020 was put down to infringements: incorrect labelling on beef, elevated metal levels in lobster, pests found it timber.
The matters were unrelated, Beijing insisted, these were customs issues that had nothing to do with the spiralling bilateral relationship that threatened up to $20 billion in Australian exports. The media was left to connect the dots: the trade hits came after Australia banned Chinese telecoms equipment supplier Huawei in 2018 then accelerated after the Morrison government called for an independent coronavirus inquiry. It was implicit not explicit.
At Canberra’s Hyatt Hotel on Tuesday afternoon the Chinese embassy gave up the charade.
The two embassy officials were uncharacteristically late. Between tables of spring diners picking their way through high tea, they delivered a message.
Unprompted, one official reached into her large blue purse and unfolded a list of Beijing’s 14 grievances. She followed it up with a warning: "China is angry,” she told Nine News reporter Jonathan Kearsley. “If you make China the enemy, China will be the enemy”.
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'Pole watcher': Trump's election lawsuits plagued by elementary errors
By Nomaan Merchant
November 20, 2020 — 8.45am
Washington: When President Donald Trump sends lawyers to court, it seems he’s not sending his best.
Fighting to challenge an election he lost to President-elect Joe Biden, Trump has launched a barrage of lawsuits across the country. Top Republicans have stood behind him and said they will wait for those cases to be resolved before officially recognising the winner, a standard that has no modern precedent.
But his attorneys have repeatedly made elementary errors in those high-profile cases: misspelling “poll watcher” as “pole watcher,” forgetting the name of the presiding judge during a hearing, inadvertently filing a Michigan lawsuit before an obscure court in Washington and having to refile complaints after erasing entire arguments they’re using to challenge results.
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US death toll poised to rise significantly higher
Timothy Moore Online editor
Nov 21, 2020 – 9.27am
More than 2000 Americans died in the last 24 hours because of the coronavirus and the overall toll is poised to march significantly higher over the next several months.
The approaching Thanksgiving break could prove to be a critical inflection point with top US health officials urging Americans not to travel at what usually is the busiest holiday of the year.
The virus is currently spreading at will across the US, as it has for several weeks. New daily cases are expanding in 47 out of 50 states, according to Morgan Stanley, with the test positivity rate greater than 10 per cent in 27 states.
"The level of spread right now remains alarming, both for the magnitude of cases and the geographic pervasiveness of the virus," Amherst Pierpont's Stephen Stanley said in a note.
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China threatens to 'poke the eyes' of Five Eyes nations over HK
By Eryk Bagshaw
November 20, 2020 — 12.28pm
China has hit back at a joint statement from Five Eyes partners condemning its actions in Hong Kong, accusing the security alliance of threatening its internal affairs.
The Five Eyes foreign ministers from Australia, Canada, the US, Britain and New Zealand on Thursday said opposition MPs who were disqualified by Beijing from Hong Kong's legislature for not being patriotic enough should be immediately reinstated.
Chinese foreign ministry spokesman Zhao Lijian on Thursday night said China would not flinch if trouble came its way.
"No matter how many eyes they have, five or 10 or whatever, should anyone dare to undermine China's sovereignty, security and development interests, be careful not to get poked in the eye," he said.
"It is only natural that those who love the country and Hong Kong should govern Hong Kong, while those anti-China disrupters who stir up troubles in Hong Kong should be knocked out."
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A tragic farce: Trump's ignominious White House exit
By Matthew Knott
November 21, 2020 — 11.50am
Washington: Karl Marx famously wrote that archetypal figures appear twice in history: first in the form of tragedy, and again as farce. In the period following the November 3 US presidential election, Donald Trump has managed to achieve both.
Trump’s attempts to cling to power despite his clear loss to Joe Biden are growing increasingly farcical and have next to no realistic prospect of success. But he is a tragic figure too because of the damage he is inflicting on America's democratic traditions as he heads out the door.
On Saturday (AEDT) Trump hosted a delegation of senior Republican Michigan legislators at the White House. The meeting had only one ostensible aim: to convince them to override the will of their state’s voters and award Michigan’s 16 Electoral College votes to Trump rather than Biden.
It represents a disturbing escalation from Trump’s previous efforts to challenge the election results in various states through the legal system.
As much as it may make him look like a bad loser, Trump is entitled to make his case before the courts where hearings are held in public and the rules of evidence apply.
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I look forward to comments on all this!
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David.
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